CEO Jim Whitehurst pilots Red Hat into future

by Elizabeth Montalbano

February 7, 2008 —

When Matthew Szulik left Red
Hat abruptly for family health reasons in December, many people were scratching
their heads over the company's new choice of CEO -- a young executive from Delta
Airlines, Jim Whitehurst. But Whitehurst's chief operating officer title at
Delta and position outside of the technology industry are misleading; a peek
into his past reveals a computer science degree and a passion for open-source
technology, not to mention a smooth operator who helped bring a struggling airline
out of bankruptcy.

Still, Whitehurst, 40, has big shoes to fill in replacing Szulik, the man who
took a small, unknown company and turned it into a savvy business competitor
that made Linux a household name and struck fear in the hearts of much bigger
rivals like Microsoft. Today, Red Hat is the leading Linux vendor and is financially
sound, but the company is in a pivotal phase of reinventing itself as a broader
open-source software provider and a multibillion-dollar technology leader that
can compete long-term with much larger companies.

Whitehurst spoke with IDG News Service this week about the key findings of
his first month on the job and where he thinks Red Hat should focus its attention
to evolve at a sustainable pace. This is an edited version of that interview.

IDGNS: I was surprised to find out that you have a computer science
background when I heard you came to Red Hat as COO from Delta Airlines. I didn’t
expect you to be such a techie.

Whitehurst: I do have geek cred. For some reason, your reputation is
always based on your prior experience. When I was at the airline, people said,
"Who is this strategy consultant running an airline?" Now I'm an airline
guy running a technology company. I wish I was called an airline guy when I
was at the airline!

IDGNS: Was this a personal interest in open source that led you to Red
Hat? Was Delta a big user of Linux?

Whitehurst: Delta certainly uses some REL (Red Hat Enterprise Linux)
and JBoss, but it's more of a personal interest. I was hacking around with Slackware,
one of the early Linuxes that was out there in the '90s, and an early adopter
and user of Fedora all the way through when I got the call for joining Red Hat.
It's always been a passion of mine, so the opportunity to get out there to lead
is an extraordinary privilege and honor for me.

IDGNS: Red Hat is currently in a great position as leader of the Linux
market and has been doing well financially, but the company has been called
upon by Wall Street to grow and possibly diversify the business. When you look
at the company, what are its biggest challenges right now?

Whitehurst: Let me start off by saying I've only been here a few weeks.
The first month [has basically been] going out on the road with customers, employees,
with investors, with analysts, with our partners-slash-competitors and really
trying to get a sense of the business, what’s working well and what’s
not. The good news is, most things are working well -- from the standpoint of
being a very healthy business growing rapidly with healthy financials.

I think you’re right there are certainly areas where we can do a better
job. First off, I would just say the general organizational focus. We actually
do a lot of different things, support a lot of different projects. We have to
be careful that we’re focusing on the right things and putting our investment
dollars where they’ll have the most impact. I'm still going through the
details of what we do and what we don't do, so stay tuned on that.

A second area where there’s still a lot of opportunity for Red Hat would
be basically [in] processes and systems, including IT systems and governance,
especially for a company that's grown so rapidly. A lot of those processes and
systems and ways of doing business are different for a company like Red Hat
that's [US]$500 million on its way to a multibillion-dollar company than they
are for a small company. Some time and attention on basic execution to make
sure we have the processes and systems in place to grow, and grow healthily,
are another area where I plan to spend a fair amount of time.

IDGNS: And what about your experience makes you well-suited to help
meet those challenges and diversify Red Hat's products beyond Linux into more
of a full open-source software provider?

Whitehurst: For starters, I am an operator. I am pretty good at getting
a company to focus, and focus on a few things. We certainly did that at Delta
and did that well in the turnaround. Obviously, having come from a larger company
and having run a larger company, I have a good sense of the processes and systems
we need to make sure governance [and] processes work well.

About whether we need to diversify or not: People are asking, "Well, should
we have bought [open-source database company] MySQL?" [Editor's note: Sun
Microsystems said last month it is buying MySQL for about $1 billion.] We are
still a very small-share player in the server OS market and a small-share player
in middleware [with JBoss]. If you look at the quality of our technology, it's
the best. We feel very good about that. We still have basic execution to do
to reach our full potential in the markets we're in. So I don't feel the need
to diversify until we nail the product and are fully [satisfied] with our existing
products. I'm not sure we want to divert our time and attention to other things.

IDGNS: A lot of people have been critical of Red Hat for what it’s
done so far with JBoss, and think success with this is key to proving Red Hat
can evolve beyond Linux. How are you going to make that business more successful?

Whitehurst: Obviously execution and commercial execution will be big
focuses going forward [for JBoss]. We fundamentally changed the JBoss business
model from a big consulting/support [business] to our enterprise/.org models
that we had with REL [on the enterprise side] and Fedora [on the .org side].
It has, without a doubt, proven to be a very successful model, and one could
argue it's about the only demonstrated successful model of any size with open
source. In the same way we have Fedora and REL, we have the .org version of
JBoss and the enterprise edition. JBoss had a different business model before,
but we think our business model has proven the most successful and the most
durable. It's the right decision. It just takes a while.

The good news of that also shows that it’s not easy to develop a good
business model around open source, so it's a relatively defensible model going
forward. We feel very good about where JBoss is. ... We think we can grow twice
as fast as the core REL business.

Red Hat’s never been involved in any material way in the application components
of the stack. We do provide a full open-source stack with the LAMP stack. We
will continue to do that, so we're playing there to some extent. In terms of
our focus and where we'll invest our team and attention and dollars, the [market
for the] infrastructure component of software worldwide is close to $100 billion.
We're a $500 million software company. I would argue we've barely scratched
the surface. I'd much rather we make sure we make progress there than get into
the CRM business. Once we've achieved our full potential in our core businesses,
we can open the aperture. But I want to make sure the company is focused on
the potential of our businesses in that core market.

IDGNS: Microsoft is coming out with Windows Server 2008 pretty soon.
Do you see this as a good opportunity to snag Windows customers who may be thinking
of upgrading and instead moving them over to Linux? Is there still competition
in this space, or will it always be the Linux camp sticks with Linux, and the
Windows camp sticks with Windows?

Whitehurst: We’re seeing a lot of migrations from Microsoft to
Linux, from Unix to Linux or even Unix to Microsoft. There's a big battleground
out there. Anytime there is a significant upgrade or change, there is an opportunity
for us. Anytime a customer stands back and says, "Let me reassess this"
and "Do we want to upgrade?" that's great for us because our value
proposition is much more compelling for our competitors. Whenever there is a
reason for customers to reassess, that gives us an opportunity to show our value,
so we'll be out there aggressively this year.

IDGNS: Much was made of Microsoft's interoperability deal with Novell
in November 2006. Has that deal hurt Red Hat in any way? Do you even view Novell
as a major competitor anymore?

Whitehurst: There may be a deal or two out there, but it hasn’t
come up to my level. We really don’t see them that much in the market.
They're not really a factor. Given our market share and certified ecosystems
of partners -- [those] really drive our position.

IDGNS: Are you worried about Microsoft's patent claims against Linux,
which were recently dismissed again by Linus Torvalds?

Whitehurst: We’ve spent a lot of time looking at that and we have
an assurance program for our customers, so they don't need to worry. Microsoft
for years now has talked about 235 patents [that they own that Linux violates],
but they’ve yet to tell us any of them and we continue to ask, "Show
us what they are." How many times can you keep saying it before you pass
on the opportunity to do anything? At first people got concerned, but after
years and years and years, you recognize it's a lot of bark and no bite. We
never want to take any claims of intellectual property violations lightly, but
those have been around so long with absolutely nothing behind them. After a
while it becomes harder and harder to take those seriously.

IDGNS: Where would you like to see Red Hat be in five years?

Whitehurst: Again, this company is currently the open-source leader.
Open source is still really a nascent part of the IT infrastructure in corporate
America. As the leader of open source, one of the things we need to do, and
should do, is foster and further open-source awareness and adoption in worldwide
IT. My view of success includes how well Red Hat does that in the future as
a multibillion-dollar company.

We want to see the continued adoption of open source as key technology across
corporate IT. [We'll] continue to foster communities of use in the developing
world where we operate, and communities of use where we remain sure that information
and software remains free and unencumbered by proprietary formats. When we do
well, we do good. We certainly have aspirations for size and growth and profitability,
but we do recognize we have a role in fostering adoption and the benefits that
go along with that. The great news is, this is a company in wonderful shape
with a fantastic brand and market position and extraordinary, high-quality people.
It's up to us not to squander that opportunity.

IDG News Service